A scheme Iran allegedly used to evade sanctions through a state-owned bank in Turkey has been detailed in court by a businessman who claimed the Turkish president, Recep Tayyip Erdoğan, had been aware of the billion-dollar operation.
In a case that has strained relations between Turkey and the US, Reza Zarrab, a Turkish-Iranian gold trader, described a sprawling money laundering network that allowed Iran access to international markets from 2010 to 2015 in violation of sanctions over its nuclear programme.
He told jurors in New York on Thursday that Erdoğan, who was prime minister of Turkey at the time, had personally authorised a transaction on behalf of Iran. Zarrab said he had bribed the then Turkish economy minister Zafer Çağlayan and the former head of the state-owned Halkbank.
Zarrab had faced charges including bank fraud and money laundering, but court papers revealed on Tuesday that he struck a deal last month with prosecutors to plead guilty and testify against his former co-defendant in the case, Mehmet Hakan Atilla, a former deputy chief of Halkbank.
The Turkish government had repeatedly raised Zarrab’s case with the US, demanding his release before the plea deal was made public. Senior Turkish officials have in recent weeks condemned the trial as a plot engineered by Fethullah Gülen, a Pennsylvania-based cleric accused by the government of orchestrating an attempted coup last year.
In its first reaction to Zarrab’s testimony, Bekir Bozdağ, the Turkish deputy prime minister, described the trial as “theatre” and a “plot against Turkey and Recep Tayyip Erdoğan”, adding that justice could not be expected.
Erdoğan was quoted by CNN Türk on Thursday as saying Turkey did not violate US sanctions against Iran and “did the right thing”.
In Turkey, the trial has been dismissed by senior officials and pro-government media as a conspiracy based on evidence gathered illegally by members of Gülen’s movement in the police and judiciary.
When asked about the possibility that the trial could implicate Ankara in the violation of sanctions, the Turkish foreign minister, Mevlüt Çavuşoğlu, said: “Why should I be concerned?
“If something is fabricated, we also have something to say. This is an indictment prepared by [Gülen’s] people … it means that the case is very much politically motivated.”
Despite the public dismissals, the case is likely to prove embarrassing for Erdoğan’s government if prosecutors provide compelling evidence linking Zarrab to other senior officials. It could also have a damaging effect on the Turkish economy if his revelations hurt the banking system at a time when the Turkish lira’s value is falling.
Relations between the US and Turkey, the two largest armies in Nato, have been greatly strained over the past few years, beginning with the former’s reluctance to intervene forcefully against Bashar al-Assad early in the Syrian civil war. Recent US support for Kurdish militias fighting Islamic State in Syria has further angered Ankara, which considers them affiliates of the Kurdish insurgency in Turkey.
Visa services for nationals of both countries have been suspended in recent weeks over the arrest of US consulate personnel in Turkey accused of having links to the Gülen network.
Çağlayan resigned in late 2013 over corruption claims. The Erdoğan government alleges that the investigation against him that year was orchestrated by the Gülen movement, and it marked the total break in ties between that organisation and the ruling Justice and Development party.
On Thursday, the pro-government newspaper Daily Sabah published a rebuttal with the headline: “Fabricated evidence, a pro-[Gülen] judge, a clear plot against Turkey: all about the Zarrab case.”
It accused the judge overseeing the caseand the former prosecutor who indicted Zarrab of having links to the Gülen movement.
Atilla has pleaded not guilty. His lawyer, Victor Rocco, told jurors in an opening statement that Zarrab was “a liar, a cheat … a one-man crime wave”, while his client, by contrast, was not corrupt and took no bribes.
Halkbank issued a statement on Thursday insisting that it “strictly adheres to national and international regulations” in all businesses and transactions.
“Foreign trade transactions and money transfers are conducted in an open, transparent manner and can be monitored by the relevant authorities,” it said.
Zarrab was arrested in March 2016 when he flew to Florida with his wife, the Turkish singer Ebru Gündeş, and his daughter, for a trip to Disney World.
